6. Long term trends - Net Farm Income (NFI)

While
FBI is the headline
business-level measure of farm income, it is a relatively new
measure of income, going back to 2009, with this publication
showing comparisons over the last six years. Net Farm Income (
NFI) has a much longer
time series available for comparing income levels and examining
trends. This measure places all farms on a tenanted basis, with
imputed rent costs applied to owner occupiers. It is quite a
different measure from
FBI, estimating the
return only to the farmer and spouse for their managerial input to
the farm business.

Looking at the general trend over the last 25 years in actual
prices (Figure 12) for the average over all farm types, suggests
that farm incomes are subject to a considerable level of
fluctuation. Farm incomes fell in 1997-98 due to the ban on beef
exports following the outbreak of bovine spongiform encephalopathy
(
BSE), a
strong pound and weak world commodity prices. They did not start to
increase again until 2000-01 and were at their highest level in
2010-11. Since 2012-13 farm incomes have declined and reached their
lowest level (£3,000) in 2015-16.

Figure 12 -
NFI for all farm types
in actual and 2015-16 prices

However, when accounting for inflation the picture is slightly
different. When the time series is converted into 2015-16 prices -
the equivalent value of incomes in today's economy - we see that
the decline in farm incomes in the mid-1990s was more severe and
the decline in income from 2012-13 to 2015-16 was similar when
converted to 2015-16 prices.

Trends vary by farm type, but the general trend described above
is witnessed across all farm types and 2015-16 farm incomes are the
lowest level across the 25-year series for mixed, dairy and cereal
farms.